Incentives to Comply with Antitrust Law: Corporate Leniency Policy in the United States and in Europe   Tags: antitrust, corporations  

Antitrust law, also known as Competition Law, promotes market competition by prohibiting anticompetitive conduct between businesses. The Corporate Leniency Policy is an anticompetitive conduct deterrence policy adopted by both the U.S. Department of Justice and the European Commission. Also known as “corporate amnesty” or “corporate immunity policy,” this policy aims to deter corporations from engaging in anticompetitive conduct (i.e. price fixing, cartel conduct, market allocation, bid-rigging, predatory pricing, exclusive dealing etc.) by providing immunity or leniency to the first party to defect from a cartel.

Those parties (corporations) that do not qualify under the Corporate Leniency Policy may enter into plea negotiation in the US with the Department of Justice and settlement process with the European Commission in Europe. Both in the U.S. and in Europe, latecomers are expected to come in full transparency with the Department of Justice and provide helpful information for the investigation. 

The main difference of the Corporate Leniency Policy in the US and in Europe is that in the former jurisdiction, only the first party that defects from a cartel may qualify for immunity while in the latter system, latecomers may get a discount of the fine.

Under the Corporate Leniency Policy in the US, the first party that provides accurate information necessary for an investigation of the illegal activity to the relevant regulatory body receives full immunity from a heavy fine that would be imposed after an investigation. There is a large incentive for a party involved in an anticompetitive conduct to defect before everyone because only the firstcomer may benefit from full amnesty. Under the Corporate Leniency Policy as enforced by the European Commission, latecomers (parties that come clean to the regulatory agency after the firstcomer) provide for a “partial leniency,” awarding percentage discounts of the fine to latecomers, while the U.S. Department of Justice does not.

Also, antitrust violations have criminal sanctions in the US, and the Department of Justice can engage in plea negotiations with the late-comers. In the European system, the European Commission may enter into a settlement process with the accused parties, which is a more predictable system with usually a fixed discount of 10% of the final fine.

Sofia Jeong is a second year law school student at Georgia University College of Law, a member of the Georgia State University Law Review, and an Intellectual Property scholarship recipient. She has bachelors in International Relations from the University of Virginia. She worked as a staigiare at in the Brussels office of a large antitrust law firm called Howrey after her first year of law school and worked at the Office of Chief Justice Hunstein at the Supreme Court of Georgia. Before law school, she was a clerk at a large South Korean law firm called Kim & Chang in Seoul, South Korea, and she was an Antitrust and IP database research manager. She is currently clerking for the Honorable Justice Harold D. Melton at the Supreme Court of Georgia and working as a Graduate Research Assistant to Professor Michael Landau in the area of Intellectual Property. She is a summer associate at the Atlanta office of Kilpatrick Stockton LLP.